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As consumers rely more and more on the “independent” reviews of their peers in choosing products and services, advertisers need to remain vigilant that their role (if any) in disseminating such reviews is fairly disclosed, accurate and not misleading.  The pitfalls in this area were recently illustrated by a pair of enforcement actions brought by the Federal Trade Commission and the National Advertising Division of the Better Business Bureau.  These actions, the latest in a series of similar enforcement efforts, confirm that review sites remain a hotbed of enforcement activity, and both actions serve as good reminders of the standards that review sites must observe to avoid similar actions.

The first of these actions is an FTC enforcement against LendEDU, which centered around the “objective,” “honest,” “accurate,” and “unbiased” rankings of financial products that LendEDU posted to its review site.  The FTC alleged that, far from being objective and honest, these rankings were in fact determined based on compensation from the companies being ranked.  In addition, the FTC alleged that over ninety percent of LendEDU’s “unbiased” positive reviews were in fact written by LendEDU employees and their friends and families.
Continue Reading FTC and NAD Actions Highlight Continued Scrutiny of Online Reviews

The Federal Trade Commission has traditionally responded forcefully to public health and economic crises, and it is doing so again in response to the coronavirus pandemic.  The current crisis does present some additional complications, however, because of its impact on the operations of the agency itself.  Three particular aspects of the FTC’s consumer protection-related response stand out: (1) continuation of the agency’s scrutiny of false and deceptive product claims that seek to capitalize on the fears of consumers, (2) signs that the agency will work with businesses to accommodate the special pressures of the crisis, and (3) continuation but postponement of other, non-enforcement activities.

The FTC’s first consumer protection priority in response to the coronavirus pandemic has been to focus on especially egregious marketing scams that target particularly vulnerable populations.  The FTC has already issued a number of warning letters to sellers of supposed COVID-19 cures ranging from tea to edible silver and to voice over internet protocol (“VoIP”) service providers facilitating illegal coronavirus-related calls.  Fraud reports continue to rise rapidly: the FTC has received 7,800 coronavirus-related complaints this year, and almost half of these were filed in the last week.
Continue Reading The FTC’s Response to the Coronavirus Pandemic: Consumer Protection Priorities and Initial Actions

Last week, the Better Business Bureau’s National Advertising Division (NAD) announced a new expedited process for digital advertising challenges.  The SWIFT (Single Well-defined Issue Fast Track) Process will allow businesses to address concerns of transparency and truthfulness on an accelerated basis, with decisions rendered within twenty business days of case initiation.  The SWIFT process is currently limited to challenges involving one of three issues:  the prominence or sufficiency of disclosures, including disclosure issues in influencer marketing, native advertising, and incentivized reviews; misleading pricing and sales claims; and misleading express claims that do not require review of complex evidence or substantiation such as clinical testing or consumer perception evidence.
Continue Reading The BBB’s National Advertising Division Launches Fast-Track SWIFT Process for Digital Advertising